6 Questions When Using Comps
Comparing the home you are considering buying or selling to other similar ones that have sold in the area can be very helpful. In fact, comps are considered one of the most valuable tools in the real estate industry. However, to get the most out of them, you have to make sure you know what you are looking for. Below are a few questions to ask when you start your comparisons.
- How old is the comp? Ideally, you want to use comps that are less than 90 days old. In slower markets and rural areas where the turnover may not be quite as fast, you might need to go back as far as six months.
- Are there any pending comps? Comps do not have to be officially sold to be useful. If there are pending sales available these are actually even better because they reflect the market’s current state.
- Where is the home located? Trends and demands in the real estate market can vary significantly from one neighborhood to the next. Comps closest to the home being compared generally offer the best comparison. If you live in a rural area, you will need to expand your search criteria. Regardless of where the home is located, always choose comps in the same school district and try not to cross any major roads or highways.
- What is the square footage and property size? If you only look at property size, you could end up comparing apples to oranges. Two properties can be the same size, but one home can be small with a bigger yard while another can have a tiny yard, but a larger home.
- Are the style similar? If you have a bungalow, multilevel, ranch, or any other type of house try to find comps in this same style. For condos, townhouses and apartment sales, look or comps with a similar style in rise, floors, elevators, proximity to public transportation, etc.
- Are the features similar? If you have plenty of properties to compare that meet the criteria already established then you can look a little closer at features. They don’t have to be precise, but if you have recently remodeled, added a new roof, installed a pool, etc., finding comps with similar features will be helpful.
To have the most rewarding real estate experience possible take a little time to find the best comps that are most closely related to the home you are looking to buy or sell. Comps provide very helpful information that can save you a lot of money, if you know what you are looking for.